Want to know one of the quickest ways to destroy your reputation? Back out of a domain deal, and you can be sure that people will think twice before doing business with you ever again. This is a small industry and word gets around very quickly. People want to do business with trustworthy people, and if you violate this trust, people won’t want to do business with you. Whether you deal with premium generics, trademarks, typos…etc – it doesn’t matter – nobody wants to do business with someone that is dishonest.
In the past few weeks on various domain forums, I have seen a number of cases where people backed out of deals after an email agreement was made. A couple even started escrow transactions but backed out because a better offer was received in the meantime. I think this is VERY shortsighted. Perhaps the seller made a few hundred dollars more on a particular transaction, but it is doubtful many people will ever do business with that person again. I had this experience once, and I won’t do business with the seller again.
As I said before, “honesty and trust is the most important thing” in the domain investment business. If an acquaintance or friend tells me about someone who backed out of a deal, I wouldn’t do business with that person. It’s not worth taking a chance that something will happen in between agreeing to terms and the domain name being transfered.
The one caveat to this is in the event a trademark claim is made on the domain name. One unwritten rule of the business is that you never sell a domain name while any potential legal issue is pending. In that case, and only in that case, is it permissible to back out of a deal – and only after explaining the situation.
Whether a contract is legally valid if its made via email doesn’t really matter for the purpose of this post. I am strictly speaking from an ethical point of view. If you happen to be someone that is contemplating backing out of a deal (or maybe recently backed out of a deal), I would strongly suggest you reconsider. This is a mistake that is made only once in this business. Usually the first time is the last and only time.